3/16/2016. Need a Compliance Blueprint?: Constructing a Comprehensive Real Estate Compliance Work Plan Designed to Address Your Organization s Risk

Transcription

1 Need a Compliance Blueprint?: Constructing a Comprehensive Real Estate Compliance Work Plan Designed to Address Your Organization s Risk April 19, 2016 HCCA Compliance Institute Las Vegas Session Objectives Understand the current environment and regulatory considerations for real estate compliance in health care Conduct a compliance risk assessment for your organization s real estate interests and identify who needs to be at the table See and share examples of communications, templates, and tools to help improve the overall health of the real estate compliance program at your organization 2 1

2 4 Compliance Program Structure - Overview 5 Compliance Program Matrix 6 2

3 Office of General Counsel (OGC) Overview/Structure Business Line Leaders What Does OGC Do? Counsel business lines on structuring compliant transactions; advise on legal and regulatory requirements and limitations Audit Office of General Counsel Compliance Work with Compliance on crafting policies and procedures; advise on changes to compliance regulatory landscape Work with Audit to remediate issues identified through periodic and targeted audits; help identify risk areas for targeted audits 7 Real Estate The Current Healthcare Compliance Environment So Why Do We Care? The HEAT (Health Care Fraud Prevention and Enforcement Action Team) is on 9 3

4 So Why Do We Care? Detroit Medical Center (12/10) $30MM settlement of FCA, AKS and Stark violations; claims included lack of written, executed leases and leases that were not commercially reasonable or FMV Parkridge Medical (HCA) (9/12) $16.5MM to settle FCA and Stark violations; rental payments above FMV to help physicians meet mortgage obligations, plus release of lease obligation St. James/Sisters of Charity (12/13) $3.85MM settlement related to physician-hospital joint venture owner of MOB leasing to physicians at below FMV rates; below FMV rent for land New England Sinai Hospital, Inc. (9/12) $1.14MM settlement of CMP allegations, including remuneration in the form of free or less than FMV space Renown Health (12/15) $598, settlement of CMP allegations, including failure to execute a lease and provision of more space and services than initially agreed upon 10 Should YOU care? Leases with physicians are financial relationships subject to Stark and AKS Provision of space to physicians without rent is remuneration Even if your organization does not lease space as a landlord or tenant, ask if you provide space to physicians or any party with a referral relationship 11 What did we consider? Stark Law Anti-Kickback Statute Time-Share Issues Space Sharing Issues Provider-Based Regulations Private Use Requirements State Laws (e.g., NC law re: conflicts of interest) 12 4

5 Compliance Risk Assessment 13 Identify Risk Assessment Prioritize Measure Enterprise-wide participation and leadership in the Risk Assessment Process is critical to successfully identify the highest risk compliance issues for inclusion in the Risk Area s Work Plan. A key component of our Compliance Program Effectiveness strategy Helps us understand where our largest risks are enterprise-wide and locally Data-driven, considering internal and external sources Most successful when it involves all the key stakeholders (i.e. FCOs, FCCs, and FCAs) Risk Assessment at CHS (continued) Audit Results OIG CMS DOJ FCOs FCAs FCCs Internal & External Environment Monitoring Investigation Findings Compliance Matrix Input Inquiries Step 1: Identification of Risks Leadership Requests Refer No Action Req d Additional Info Req d Address Step 2: Measurement & Assessment of Risks Step 3: Prioritization & Management of Risks Single view document with a standardized approach to categorize, prioritize and manage compliance risks identified above. 5

6 Stakeholders Around the Table Compliance Legal Counsel Real Estate Services Department (if applicable) Construction Management (if applicable) Facilities Management (if applicable) Finance Administrators responsible for overseeing contracts Audit Services ***Endorsement by Senior Leadership 16 Stakeholder Meeting Objectives Key: Recognize the need for multiple sessions to review, research, refine: Agenda(s): Why we are here: Develop a compliance plan to address risks in this area Focus the conversation around relevant compliance issues (including defining compliance ) Identify and narrow down the highest risk items Discuss current infrastructure, processes and policies Discuss what must be internally monitored 17 The Compliance Work Plan 6

7 A B C Our Work Plan Strategy Auditing & Monitoring Program Management Education 19 Auditing and Monitoring Metrics 1. Real Estate Leases Leases and subleases for full-time use of space 2. License Agreements for Part-time Use of Space Periodic uses of space, sometimes called hotelling or time-share arrangements 3. Fair Market Value Appraisals Standards required for third party appraisals or broker s opinions of value to ensure proper determination of FMV 4. Space Use Onsite reviews of actual space use conducted to verify that actual use of space is in line with terms of applicable document (lease, sublease, license agreement) 20 Real Estate Lease Agreement Considerations Lease term Effective date and termination date Floor plan or legal description Space measurement accuracy Space use restrictions Common areas Additional services Lease rental rate Lease escalator clause Rental rate is FMV No per click language Lease signed by all parties Lease fully executed prior to effective date Bond financed space considerations/private use No sanctions/exclusions of participants 21 7

8 Part-Time Use License Agreements Considerations Schedule is specified Interval rent is specified Common and exclusive areas are accurately described Proximity to hospital not considered Rental rate calculation methodology Frequency of lease amendments Key Man Space stipulations; identification and proper valuation of equipment and services 22 Appraisals or Broker Opinions of Value Recites Stark and AKS definitions of FMV Rental rate set forth as a range Analyzes services offered to tenant Includes length of proposed lease term Takes tenant improvement allowances into account Considers other concessions Based on comparables Does not take into account proximity of hospital or referral sources Does not take into account other buildings owned by the organization (for owned MOBs so not artificially setting the market) 23 Space Use Space conforms to lease specifications Use periods/times conform to lease specifications 24 8

9 Program Management (Process/Policy) Considerations Inventory of all real estate holdings Fair market value review process New space leases Contract management Rent reconciliation processes Shared space & timeshare leases Tax-exempt status considerations Environmental protections 25 How is Compliance Gauged? For each metric, consider the risks to be assessed Initially, every risk is equally weighted Select a manageable sample (across multiple portfolios, as necessary) Trend outcomes, by facility and across enterprise Ask: What weakness caused the error? What corrective action plans worked well? What standardized controls can be implemented and shared? Does Senior Leadership and the Board need to be made aware? 26 Expect Challenges Resource limitation (time) Resource limitation (knowledge) The need for a plan to manage exceptions Advocating for leadership buy-in Requirement to engage internal or external Counsel 27 9

10 Communication & Implementation Strategy Identify constituents across the enterprise Understand and communicate how the plan will fit into the overall Compliance Program structure Allow for time to vet and refine the plan Establish a firm timeline for implementation Right size the approach as appropriate 28 Session Recap We discussed: The current environment and regulatory considerations for real estate compliance in health care How to conduct a compliance risk assessment for your organization s real estate interests and who needs to be at the table Examples of communications, templates, and tools to help improve the overall health of the real estate compliance program at your organization 29 Questions? 30 10

11 Speaker Contact Information Katie Dever, Vice President, Compliance Ashley Pearson, Associate General Counsel